David Cameron may be having a bad month, but at least he is not currently running a faltering election campaign to remain in power. In France, Cameron's counterpart, Nicolas Sarkozy, is odds on with the bookmakers to lose the Elysee Palace to his Socialist rival, Francois Hollande, this Sunday.

Electoral change tends to bring volatility to an economic area, even if the markets 'approve' of the candidate. The fact that the bond markets view some of Monsieur Hollande's electoral rhetoric as if it were taken from the "Book of Revelations" means that he is likely to be afforded a post-election honeymoon far shorter than most.

Sound-bites such as "my greatest adversary is big finance" are all well and good when you're on the campaign trail and leading a political party that has only won one election since World War 2. We must hope that this is merely tub-thumping to electrify the base, as opposed to Hollande declaring all-out war on the inhabitants of La Défense.

Other things have unnerved the markets more, primarily Hollande's apparent fundamental lack of a realisation that Europe is not even halfway through the economic hardships which will hamper it for years and years to come. Promises such as his pledge to renegotiate the recent EU fiscal pact are particularly worrying. While the candidate has been quick to say that it is not a complete reversal that he wants but the addition of a growth plan, it comes on the back of other pledges to reduce the retirement age to 65 and increase the higher tax rate to a pip squeaking level of 75%.

George Osborne argued last month in his most recent Budget that the 50% tax rate here hurt rather than helped the UK economy; a 75% rate would put the hammer to French tax revenues as people would either leave or spend a huge amount of money attempting to avoid such a measure. The net result could be a horror show for the French fiscal position.

It also throws the EU's most important relationship, between France and Germany, out of kilter. Chancellor Merkel has been very vocal about the fact that the treaty is closed and non-negotiable and Hollande has made it clear that his first foreign trip will be to Berlin to represent his views. Unfortunately as the old saying goes "he who pays the piper gets to call the tune"... and that isn't France, let's put it that way.

The French election is not a global game-changer in itself but the nightmare scenario is thus. Hollande takes power and remains intransigent on his belief of renegotiating the fiscal pact. France's borrowing costs rise, alongside those of the rest of the periphery economies. Rumours of ratings agency movements swamp the market with bailouts not only mooted for Spain but now France as capital flight increases. Of course, the money to provide this level of support does not exist and therein lies the rub.

France, and the rest of Europe, is still at a crossroads. The path that Hollande could lead his country down could be the road to ruin.

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